Otter Tail Power's Resource Plan is Out of Step with the Realities of a Changing Energy Sector

Clean Energy Organizations' plan to end coal dependency by 2030 and invest in renewables would deliver substantial cost savings to customers, respond to climate crisis.

Contacts:
Jo Olson, Fresh Energy, olson@fresh-energy.org, 218.290.6247
Sarah Horner, MCEA, shorner@mncenter.org, 612-868-3024
Margaret Levin, Sierra Club, margaret.levin@sierraclub.org, 612.259.2446
Kelley Welf, Clean Grid Alliance, kwelf@cleangridalliance.org, 612.978.2444

SAINT PAUL, MINNESOTA - (September 13, 2023) On March 31, 2023, Otter Tail Power filed an update to its 2021 Integrated Resource Plan (IRP) with the Minnesota Public Utilities Commission. The updated proposed long-range plan, which lays out Otter Tail Power's plans for electricity generation and investments over the next 15 years, includes some plans for new wind, solar, and storage, but still remains extremely dependent on coal power, ignoring the opportunity to save customers' money by phasing out expensive coal plants. The proposal also ignores federal and state carbon limits and damages to the climate and human health.

Clean Grid Alliance, Fresh Energy, Minnesota Center for Environmental Advocacy, and Sierra Club—collectively the Clean Energy Organizations (CEOs)—conducted independent analysis that found Otter Tail Power's plan to rely heavily on coal power into the 2040s is expensive and risky. Their analysis concludes that the company should pursue a lower-cost, lower-risk plan including larger investments in clean energy.

Otter Tail Power's ability to keep pace in a dynamic energy sector is threatened by the utility's proposal to continue heavy reliance on the Coyote Station and Big Stone coal plants. This long-term coal reliance proposal ignores Otter Tail Power's own analysis showing that the Coyote Station coal plant is extremely expensive, and that the utility should be planning to end reliance on it as soon as possible. Otter Tail Power did not even review the economics of its Big Stone plant, a tremendous oversight.

In contrast, CEOs' independent expert analysis found that the utility should pursue a path away from Coyote Station by 2028 and Big Stone by 2030, while adding more renewable generation and battery storage to its portfolio. Doing so would significantly lower costs for Otter Tail Power customers and improve environmental and health outcomes across the region, while averting damage to Minnesota's climate.

Today, September 13, 2023, the CEOs filed a Preferred Plan with the Minnesota Public Utilities Commission that would save Otter Tail Power customers more than $800 million over the planning period while also having significantly lower carbon emissions. The Preferred Plan also leverages Otter Tail Power's location to take advantage of some of the best wind resources in the United States. The plan adds 400 megawatts of wind and solar in 2029-2031 to replace Coyote Station's capacity and builds upon Otter Tail Power's existing plans for renewables with the addition of more wind power and battery storage from 2029-2032.

The CEOs are urging the Commission to modify Otter Tail Power's plan to include withdrawing from Coyote Station no later than 2028, instead of in 2040 as Otter Tail Power currently intends. Additionally, the CEOs recommend that the Commission further modify the plan to require Otter Tail Power to begin planning now to withdraw from the Big Stone coal plant by 2030, find that the public interest supports the utility adding more renewables and storage, and that Otter Tail Power must consider the health and equity implications of continued use of coal plants.

Otter Tail Power's plan also proposes adding onsite liquid natural gas storage at Astoria Station in Deuel County, South Dakota. The CEOs recommend the Commission defer a consideration of this proposal until Otter Tail Power is on track to exit Coyote and Big Stone. While those resources are still in the utility's system, it is premature to consider a large investment in a backup fossil fuel resource.

"Otter Tail Power's current plan is out of step with the energy transition taking place in the Midwest and would leave important clean energy opportunities on the table. We are excited to put forward a plan that can reliably and affordably put the company on a path to decarbonization at the pace and scale of the climate crisis, by avoiding new fossil fuels and investing in renewables and storage," said Isabel Ricker, Director of Clean Electricity at Fresh Energy.

"Otter Tail Power's long-term plan to continue to operate two coal plants would harm people's health, cause billions of dollars in climate damage, and burden its customers with needlessly high utility costs. This dated approach to utility planning ignores everything we know about climate science, and misses critical opportunities for the utility to capitalize on some of the best wind sources in the country. We are counting on the PUC to course-correct Otter Tail's proposal to better serve Minnesota's ratepayers," said Amelia Vohs, regulatory attorney at MCEA.

"We understand the challenges of putting together a robust resource plan that ensures reliability and affordability while moving toward a carbon free electricity system," said Peder Mewis, Regional Policy Manager with Clean Grid Alliance. "We look forward to working with Otter Tail Power to develop a plan that capitalizes on historic federal incentives, and maximizes the opportunities to invest in clean, renewable resources right in our backyard."

"Otter Tail's commitment to coal is hurting Minnesotans. Otter Tail's own analysis shows that it would save customers money to plan to transition away from coal by 2030 at the latest, while investing in the clean energy that will bring jobs to Minnesota communities. We are asking the Commission to reject the utility's coal-dependent plan and instead ensure they are delivering the affordable, clean power their customers deserve," said Margaret Levin, Minnesota State Director at the Sierra Club.

Otter Tail Power's long-range energy plan will impact both Minnesota and North Dakota's energy and climate goals. This year, Minnesota passed a 100% clean electricity law that commits all utilities to provide Minnesota customers with 100% carbon-free electricity by 2040 and supports Minnesota's Climate Action Framework. This is also a time of unprecedented opportunity for utilities to expand renewables and beyond within the federal Inflation Reduction and Infrastructure and Jobs Act.

The CEOs look forward to continuing to work with Otter Tail Power and other parties through the regulatory process at the Commission in coming months to ensure the right path forward for Otter Tail customers, the state, and the region.

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